In the competitive building materials industry, underpriced SKUs can significantly impact profitability, causing margin erosion and financial strain. For Canadian distributors and manufacturers managing vast product catalogs, leveraging analytics to identify underpriced stock keeping units (SKUs) is essential for maintaining healthy margins and competitive pricing. Buildix ERP provides advanced analytics tools designed to spotlight pricing anomalies, enabling proactive adjustments.
Why Underpriced SKUs Are a Risk
Underpriced SKUs sell below their optimal price points, often due to outdated pricing, manual errors, or market shifts. Consequences include:
Reduced profit margins
Inability to cover production or procurement costs
Distorted sales data, leading to poor business decisions
Competitive disadvantage if pricing inconsistencies confuse customers
How Analytics Helps Identify Underpriced SKUs
By analyzing sales, cost, and market data, Buildix ERP’s analytics modules highlight SKUs where pricing falls short of profitability targets or competitor benchmarks. Key analytic approaches include:
Margin Analysis: Comparing current prices to cost of goods sold (COGS) to flag SKUs with thin or negative margins.
Price Elasticity Monitoring: Identifying SKUs where price increases have little impact on sales volume, signaling opportunity for price adjustments.
Competitive Benchmarking: Cross-referencing prices against market rates to detect undervalued products.
Sales Velocity Correlation: Evaluating whether high sales volumes compensate for low margins or indicate sustained underpricing.
Steps to Identify and Correct Underpriced SKUs
Collect Accurate Cost Data
Ensure Buildix ERP’s cost inputs reflect the latest procurement, manufacturing, and overhead expenses.
Set Margin Thresholds
Define minimum acceptable margin levels for each product family or SKU category within the ERP.
Run Regular Analytics Reports
Schedule automated reports highlighting SKUs with margins below thresholds or deviating from pricing rules.
Investigate Root Causes
Use ERP data drill-downs to understand why specific SKUs are underpriced — outdated price lists, errors, or market shifts.
Adjust Pricing Rules
Update Buildix ERP pricing logic or manually revise prices for flagged SKUs to restore profitability.
Monitor Impact
Track sales, margins, and customer feedback post-adjustment to ensure changes do not adversely affect demand.
Benefits of Using Buildix ERP Analytics
Proactive Margin Protection: Early identification prevents prolonged losses.
Data-Driven Pricing Decisions: Removes guesswork from price optimization.
Improved Financial Performance: Targeted corrections enhance overall profitability.
Competitive Alignment: Ensures prices reflect market conditions and company strategy.
Why Canadian Building Materials Businesses Trust Buildix ERP
Canada’s regional diversity and dynamic building materials market demand continuous pricing vigilance. Buildix ERP’s integrated analytics enable companies to maintain pricing discipline across locations, product lines, and customer segments—key to staying competitive and profitable.
Conclusion
Identifying underpriced SKUs is critical for sustainable success in building materials distribution and manufacturing. With Buildix ERP’s powerful analytics, Canadian companies gain visibility into pricing gaps and can swiftly adjust to protect margins and market position. Investing in analytic-driven pricing oversight is a strategic move that drives growth and resilience in a competitive industry.
